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Sutter reaches out to Barton

Rob Bhatt

Any time the president of a $2.7 billion a year health care conglomerate shows up in your hometown to talk about affiliating with the local hospital, it’s going to attract attention.

Such was the case Wednesday morning at Barton Memorial Hospital, the site of a discussion on hospital consolidation with Van Johnson, president and CEO of Sacramento-based Sutter Health.

More than 80 people – physicians, administrators and others – gathered on a hospital lawn for the discussion.



Hospital officials repeatedly emphasized that the meeting was informational only, and that no talks of a merger or acquisition are under way with Sutter or anyone else.

Among the possible benefits of a Barton-Sutter partnership touted by Johnson and other Sutter executives – including 1975 South Tahoe High School graduate Pat Fry, now a regional president for the corporation:



— Like Barton, Sutter is a not-for-profit corporation that does not have to base decisions on quarterly profit quotas and can reinvest revenues into the communities it serves. As a nonprofit, Sutter does not purchase hospitals. It forms alliances.

— The 26-hospital group has an A-plus bond rating that allows any of its member hospitals to secure construction financing at much lower interest rates than independent hospitals.

— Member hospitals can obtain equipment purchased in bulk for all hospitals at better rates than independents.

— The company is a pioneer in research and procedure development that shares its breakthrough knowledge with affiliated physicians.

Johnson made it clear that Sutter has an interest in Barton.

“This (Barton) is a great organization,” he said, after the presentation. “We’ve known that for a long time. But we’re not going to force our way into here.”

For a company like Sutter, adding hospitals to the group helps its bargaining position in contract negotiations with health insurance providers, medical supply companies and bond customers.

His presentation may have done little to quell rumors that the local hospital may get swept up in the industry’s consolidation craze.

“I would hope not,” said Dr. Stephen Abelow, a longtime local orthopedic specialist, about the possibility of Barton affiliating with any large hospital network. “But I’m afraid yes.”

The continuing climate of change throughout the medical industry prompted Wednesday’s discussion, said Barton CEO Bill Gordon.

During the past several years hospitals have consolidated, and so have insurance companies.

A more recent trend is the consolidation of businesses for the purpose of negotiating health care plans for their employees.

Throw in the growing number of multi-specialty groups formed by physicians and the development of alternate medical facilities, and the climate is right for sweeping changes – even in South Lake Tahoe.

The potential for change was cited as the motivation for inviting the Sutter president to South Lake Tahoe.

“This is the first in a series of discussions on looking at options,” Gordon said at the outset of the meeting. “Only through being educated on a number of issues can this board and this community make decisions about the future.”

Gordon reiterated the sentiments at the end of the session, when asked if some type of future consolidation between Barton and a larger network is inevitable.

“It (consolidation) is not inevitable,” he said. “But to predict anything past even two years is fuzzy. The important thing for people involved in health care is to know what the options are, because change is inevitable.”


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